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US FINANCIAL MARKET

U.S. Stocks Drop at the Open as Bullard Says Rates to Rise by March

  • The first interest rate increase by the Fed may come at the end of the first quarter in 2015, Bullard said in an interview on Fox Business. The U.S. economy may grow 3 % in the coming quarters, he said.
  • JPMorgan, Chevron and Microsoft dropped more than 1 % to lead losses in the Dow Jones Industrial Average.
  • Bed Bath & Beyond tumbled 9.2 % after forecasting profit that was less than analysts’ estimated amid competition from online retailers.
  • For 48 days, the S&P 500 has failed to post a gain or loss exceeding 1 %, the longest stretch since 1995.

S&P 500 to hit 2,000 for first time by end of 2014: Reuters poll

  • The median forecast of 41 strategists polled in the past week would represent an 8 % rise in the benchmark index from the end of 2013.
  • Expectations for U.S. corporate profit growth have also improved.
  • Analysts expect S&P 500 earnings to increase by 9.1 % this year, up from an April 1 forecast of 8.7 % growth

Oil Drops as Iraq Violence Seen Sparing Crude Supplies

  • Iraq’s oil minister said the nation’s crude exports will accelerate next month.
  • Iraq pumped 3.3 million barrels a day last month, making it the largest producer after Saudi Arabia among OPEC’s 12 members.

Alcoa to Acquire Aerospace Parts Maker Firth Rixson for $2.85 Billion

  • Firth Rixson, which is based in U.K., makes seamless rolled rings for jet engines, made from nickel-based superalloys and titanium. Its products are also sold to the oil and gas industry and manufacturers of gas turbines.

Google Pushes for Android Everywhere as Mobile Spreads

  • Google unveiled a new version of the software for handsets and tablets and showed it in use in smartwatches, cars and a new television service.
  • The new version of Android, dubbed L and available to developers today, will let them easily implement features such as animations and will include more privacy tools.
  • Google also unveiled plans to get the software into the living room through an effort called Android TV.
  • Google also rolled out Android Auto, a bid to get more of its software into cars.
  • Rivals like Apple as well as Amazon are also pushing to tie more services and devices together.
  • Smartphones based on Android made up 78 % of the global industry in 2013, up from 66 % in 2012.

ConAgra revenue beats estimates as commercial food sales rise

  • ConAgra Foods, the maker of Hunt’s tomato ketchup and Slim Jim beef jerky, reported higher-than-expected revenue and forecast a modest recovery in its struggling private-brands business.
  • Revenue fell almost 3 % to $4.44 billion. Analysts on average had expected revenue of $4.40 billion.
  • The company reported a net loss of $324.2 million, or 77 cents per share, compared with a profit of $192.2 million, or 46 cents per share, a year earlier.
  • The company cut its adjusted profit forecast last week as more people opt for healthier food options.

New York attorney general accuses Barclays of ‘dark pool’ fraud

  • The New York State attorney general’s lawsuit alleges that Barclays promised to get the best possible prices for customers looking to buy or sell shares but instead took steps that maximized the bank’s profits.
  • The action is the highest profile case yet to emerge in the U.S. authorities’ efforts to ensure that dealers are not ripping off investors in increasingly automated stock markets.
  • Dark pools were originally created to allow investors to execute big trades without tipping off the market. But ever-larger volumes of trades have been shunted into dark pools and their critics say the opacity of the markets may be resulting in more and more investors getting ripped off.

U.S. healthcare profit outlook brightens on Obamacare, drug prices

  • U.S. healthcare companies are winning higher profit forecasts, bucking a wider trend on Wall Street, as pricey new biotech drugs hit the market and insurance enrollment rises under the Affordable Care Act.
  • About 8 million people have signed up for the plans.
  • Profit estimates for healthcare companies for 2014 have jumped from up 8.3 % at the start of January to up 12.2 % now.
  • Biotechnology companies, which were top victims in the sell-off of so-called momentum stocks earlier this year, are the biggest contributors to the gain. They are benefiting from pricing power, as more of their blockbuster drugs come on the market.

 

US ECONOMY & POLITICS

Consumer Spending in U.S. Climbed Less Than Forecast in May

  • Purchases, which account for about 70 % of the economy, climbed 0.2 %. Survey called for a 0.4 % rise.
  • Cars and light trucks sold at a 16.7 million pace in May, the fastest rate since February 2007.
  • Disposable income, or the money left over after taxes, rose 0.2 % in May for the second month after adjusting for inflation.
  • The saving rate increased to 4.8 %, the highest since September, from 4.5 %.

Second-quarter growth estimates have ranged as high as a 4.0 % annual pace

  • The economy contracted at a 2.9 % pace in the first quarter, the worst performance in five years.
  • While the U.S. economy suffered in a weak first quarter, economists say the effects of an unusually bad winter will fade.

New applications for state unemployment benefits slipped 2,000 to 312,000

  • The declining claims suggest a recent streak of payroll job gains above 200,000, is likely to be sustained, lending the economy enough momentum for inflation to start perking up.

Inflation ticking up

  • A price index for consumer spending (PCE) increased 0.2 % in May, rising by the same margin for a third consecutive month.
  • In the 12 months through May, the personal consumption expenditures (PCE) price index was up 1.8 %, the largest gain since October 2012.

 

EUROPE & WORLD

Ikea Boosts U.S. Hourly Pay by 17% to $10.76 amid Minimum-Wage Debate

  • Ikea Group, the world’s largest furniture seller, will boost the average minimum hourly wage for workers at its U.S. stores to $10.76 as retailers and fast-food chains face criticism for not paying enough.
  • Ikea is not alone in boosting wages. Gap announced in February that it would raise its hourly pay for U.S. employees to $9 in 2014 and $10 next year.

Daimler and Nissan approve joint Mexico production

  • Daimler and Nissan have finalized a joint venture deal to build future Mercedes and Infiniti compact cars in Mexico.
  • The 50-50 venture will broaden Nissan’s premium Infiniti lineup, expand Daimler’s North American production and reinforce the German carmaker’s relationship with the Renault-Nissan alliance.

 

TODAY in HISTORY

  • The bicycle was patented by W. K. Clarkson (1819)
  • Hong Kong was proclaimed a British crown colony (1843)
  • The first Grand Prix motor race was held in Le Mans, France (1906)
  • The St. Lawrence Seaway, connecting the Great Lakes and the Atlantic, was opened (1959)
  • President John Kennedy gave his, “Ich bin ein Berliner” (I am a Berliner) speech in West Berlin (1963)
  • The first map of the human genome, which required decoding more than 3 billion biochemical “letters” of human DNA, is completed (2000)

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg.

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